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Q. Economic theory in general and trade theory in particular are replete with equivalencies. For illustration, it is argued that for any specific tariff one can search an equivalent ad valorum tariff; and that for any quota one can evaluate a tariff equivalent. Show conditions or situations under which a specific and an ad valorum tariff are not equivalent. Show conditions or situations when a tariff and a quota are not equivalent.
Answer: Example during a period of price inflation an ad valorum tariff would become increasingly more effectual. The government doesn't receive any of the quota revenues unless the import licenses are auctioned or sold.
In the Ricardian analysis, why does each trading partner have an incentive to produce at an endpoint of its production-possibility frontier? Why are prices of factors of production
Q. Explain the purpose of the given figure? Answer: To demonstrate that spot and forward exchange rates are in general close to each other.
Porter Competitive Forces Model: Effectively dealing with the competitive forces that exist within its industry lead to a successful organization. The organization i
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Q. "Bank failure may not be limited to banks that have mismanaged their assets." Explain why. Answer: A sound bank countenanced with the wholesale loss of deposits is likely to
Q. Who are the main actors in the international capital market? Answer: 1. Commercial banks. 2. Corporations. 3. Non-bank financial institution
Q. What are the predictions of the PPP theory with regard to the real exchange rates? Answer: The real exchange rate among two countries is a broad summary measure of
Q. One reason international trade has a powerful effect on the distribution of income within countries is that some factors are "specific", and therefore cannot move costlessly fr
Q. What are the reasons for the world as a whole running a substantial current account deficit? Answer: This deficit improved sharply in the early 1980s and has remained high.
What does the factor proportions theory posits
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